PC channel braced for 10 per cent price hike

Large customers will react by eeking another six months use from their old PCs, according to Gartner

Sky-rocketing PC prices will prompt organisations in the UK and Europe to lengthen the lifetime of their machines by six months, Gartner has warned.

According to the market watcher, PC vendors selling into Europe will have little choice but to imminently hike their prices to cover the impact of their declining "dollarised" profits. Prices could rise by up to ten per cent in the Eurozone and Japan, where local currencies have fallen by a fifth since the start of 2015, Gartner predicted.

Larger firms will react by shifting budgets earmarked for PCs to software and services and sweating old machines for longer, the market watcher opined.

"Large organisations will look to lengthen their PC lifetimes by six months (10 per cent) in comparison with 2014, rather than buying less expensive models or removing requirements for key features," said Ranjit Atwal, research director at Gartner. "In addition, purchases of optical drives and optional accessories will disappear."

This is contrast to consumers, 30 per cent of which Gartner expects will react by buying down the price curve rather than holding off purchasing altogether.

The sharp appreciation of the dollar against the euro and other currencies has been a punch in the guts to the US-based IT giants this year, with IBM, for instance, seeing EMEA sales plunge by a fifth in Q1.

But the PC manufacturers have a few tricks up their sleeve to minimise the damage, Atwal said.

"Device vendors will mitigate the impact of their declining "dollarised" profits by taking advantage of single-digit-percentage decreases in PC component costs during 2015, and by selling PCs with fewer features to keep prices down," Atwal said.

"However, vendors' margins will fall, even as they shift their shipment focus to the regions least affected by these currency effects."

Despite the havoc price fluctuations are wreaking, Gartner still expects that total end user spending on devices in constant dollars will rise four per cent this year to $116bn.